Dentons

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Leroux: CRA owes duty of care to taxpayer

By Alexander Coombes and Christopher Funt

Can a Canadian taxpayer successfully sue the Canada Revenue Agency?

In recent years, taxpayers have brought a number of civil actions against the Canada Revenue Agency (CRA). The allegations in such cases ranged from negligence to fraud, extortion and deceit. Often, taxpayers’ claims are brought as the tort of misfeasance in public office or as claims in negligence. So far, the courts have not clearly determined the scope of CRA’s civil liability. The recent decision of the British Columbia Supreme Court in Leroux v Canada Revenue Agency (2014 BCSC 720) provides guidance on the application of common law torts to CRA conduct.

Mr Leroux, the taxpayer, alleged that he was threatened, deceived and blackmailed by a CRA auditor who was reviewing Mr Leroux’s goods and services tax (GST) and income tax returns. After reassessments were issued, CRA claimed Mr Leroux owed more than $600,000 (£330,000) in taxes, interest and penalties. After an appeal to the Tax Court, some payments by Mr Leroux and a successful application for interest relief, Mr Leroux was actually refunded $25,000. In the meantime, Mr Leroux lost his business and home. He sued the CRA for misfeasance in public office. CRA argued that it owed no private law duty of care to an individual taxpayer…

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